USD/JPY Forecast: Fails to hold above 105.00 amid plummeting US T-bond yields
Premium|Take advantage of 50% OFF on your first month.
Start your subscription and get access to all our original articles.
You have reached your limit of 5 free articles for this month.
Get Premium without limits for only $9.99 for the first month
Access all our articles, insights, and analysts.
UNLOCK OFFER- Retail Trade in Japan expanded at a stronger pace than expected in June.
- 10-year US Treasury bond yield slumped to its lowest level in three months after US GDP report.
- USD/JPY could stretch lower before making a technical correction.
The USD/JPY pair gained traction during the Asian session on Thursday and advanced to 105.30, but pared its daily gains to settle below 105.00. The renewed selling pressure surrounding the greenback and the risk-off market environment in the second half of the day forced the pair to turn south.
Earlier in the day, the data from Japan showed that Retail Trade surged by 13.1% on a monthly basis in June and surpassed the market expectation for an increase of 7.1% by a wide margin. Nevertheless, market participants largely ignored this data.
In the early American session, the US Bureau of Economic Analysis' first estimate revealed that the real Gross Domestic Product (GDP) in the US shrunk by 32.9% on a yearly basis in the second quarter. Although this reading came in slightly better than analysts' estimate for a contraction of 34.1%, it ramped up the demand for safe-haven US Treasury bonds and caused their yields to fall sharply. With the 10-year US T-bond yield losing nearly 6% and falling to its lowest level since late April at 0.54%, the USD weakened against its peers.
USD/JPY short-term technical outlook
The USD/JPY pair extended its losing streak into the sixth straight day on Thursday. On the daily chart, the RSI stays in the oversold area below 30 for the fourth straight day. However, the RSI on the 4-hour chart is staying near 35, suggesting that the pair could continue to push lower before staging a technical correction. On the same chart, the 20 SMA aligns as a dynamic resistance at 105.15.
Support levels: 104.75 104.40 104.00
Resistance levels: 105.15 105.80 106.10
- Retail Trade in Japan expanded at a stronger pace than expected in June.
- 10-year US Treasury bond yield slumped to its lowest level in three months after US GDP report.
- USD/JPY could stretch lower before making a technical correction.
The USD/JPY pair gained traction during the Asian session on Thursday and advanced to 105.30, but pared its daily gains to settle below 105.00. The renewed selling pressure surrounding the greenback and the risk-off market environment in the second half of the day forced the pair to turn south.
Earlier in the day, the data from Japan showed that Retail Trade surged by 13.1% on a monthly basis in June and surpassed the market expectation for an increase of 7.1% by a wide margin. Nevertheless, market participants largely ignored this data.
In the early American session, the US Bureau of Economic Analysis' first estimate revealed that the real Gross Domestic Product (GDP) in the US shrunk by 32.9% on a yearly basis in the second quarter. Although this reading came in slightly better than analysts' estimate for a contraction of 34.1%, it ramped up the demand for safe-haven US Treasury bonds and caused their yields to fall sharply. With the 10-year US T-bond yield losing nearly 6% and falling to its lowest level since late April at 0.54%, the USD weakened against its peers.
USD/JPY short-term technical outlook
The USD/JPY pair extended its losing streak into the sixth straight day on Thursday. On the daily chart, the RSI stays in the oversold area below 30 for the fourth straight day. However, the RSI on the 4-hour chart is staying near 35, suggesting that the pair could continue to push lower before staging a technical correction. On the same chart, the 20 SMA aligns as a dynamic resistance at 105.15.
Support levels: 104.75 104.40 104.00
Resistance levels: 105.15 105.80 106.10
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.